A business-backed public policy group says the cost to Rhode Island of not repaying the money owed after 38 Studios' bankruptcy would exceed the amount of the debt.
The Rhode Island Public Expenditure Council's executive director testified Thursday before the House Oversight Committee the question isn't whether the state would be penalized for a default, but by how much.
John Simmons says Rhode Island would face bond rating downgrades. RIPEC's analysis projects increased borrowing costs anywhere from $82 million to $167 million over 20 years. That doesn't include what he called additional costly ripple effects.
Gov. Lincoln Chafee says the state must honor the debt.
"Well the main thing is not to default," Chafee said. "That's really the main message that I have."
Rhode Island still owes some $87 million from the deal that gave 38 Studios a $75 million state-backed loan. Some lawmakers have been pushing default.
State Rep. Doreen Costa, D-North Kingstown, said she feels the moral obligation is less to Wall Street and more to taxpayers.
"The most important, hot-button issue in the state of Rhode Island concerning taxpayers is that they do not want to pay 38 Studios back. I have to do what my district and the taxpayers want and right now, they don't want to hear anything about paying back 38 Studios," she said.
Chafee's office says an independent report on the bond payment issue is due out soon.
NBC 10 contributed to this report.